PE of 8, no write-downs? Goldman Sachs is cheap

Posted Dec 20th 2007 5:13PM by Aaron Katsman
Filed under: Citigroup Inc. (C), Goldman Sachs Group (GS), Morgan Stanley (MS), Stocks to Buy

It made $3.22 billion last quarter, it had no write-downs due to subprime, yet the investment community for some reason continues to sell. Let's face it, Goldman Sachs (NYSE: GS) in just cheap. The company hasn't had to receive a cash infusion from some foreign firm, like competitors Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C), yet even though it keeps producing record profits each quarter, the stock has fallen on tough times. Morgan reported a huge loss and needed to get a foreign investment, yet the stock has moved up strongly over the last two days. It doesn't make any sense.

Goldman trades at a PE of only 8, it's not like its valuation is out of whack. Goldman is a best-of-breed stock, clearly the class of the financials. Long-term investors who pull the trigger now and buy Goldman will laugh all the way to the bank.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 12/20/07.

Tags: financials, Goldman Sachs, GoldmanSachs, GS